Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Economy Hits An Iceberg—Government Spending Soars
It’s too early to use the R-word to describe the Canadian economy, but it seems inevitable. Real GDP contracted 0.4% (SAAR) in Q2, driven by falling exports, weak business investment, and a decline in non-residential construction. The contraction would have been even deeper if not for a rise in household and government consumption. Since the only growth was driven by dipping into savings and relying more on credit, the support seems unlikely to persist.
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Canada’s Capital Flight Crisis: Record Exit By Foreign & Domestic Investors
The crisis of confidence in Canada’s growth prospects worsened in Q2. Foreign investors pulled $16.8 billion out of Canadian securities, marking the biggest divestment since 2007. At the same time, domestic firms spent $26.8 billion abroad, significantly increasing outflows as inflows from foreign direct investment collapsed 39% in the quarter. It gets worse—portfolio investment saw a net outflow of $43.7 billion, as both foreign and domestic investors see fewer opportunities in Canada and more abroad.
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Canada Returns To The Office As Remote Work Shrinks By 790k
Working remotely may be the future, but not in Canada. The country reported 790,000 fewer remote workers since 2022, with the share falling from 22.4% to 17.4% of workers. The number of workers commuting climbed by 1.5 million over the same period, consuming more time and disposable income. The shift is part of a deliberate policy effort to anchor workers to major cities and revive hollowed-out downtown cores post-pandemic.
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Canadian Real Estate Sellers Canceled Over 1 In 5 Listings, Record Volume
Canadian real estate sellers are cancelling listings in an attempt to limit downward pressure on prices. About 22.5% of listings were cancelled in July, approaching the record high set in 2022 as the low-rate speculative boom unwound. However, listings are about 25% more numerous than they were back then. While cancelling and listing later may help create a stronger demand balance to preserve prices, it also risks relistings into even higher inventory with near-record completions now hitting the market.
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Canadian Mortgage Debt Growing, But Pace Is Still Near Recession Levels
Canadian household mortgage debt topped $2.3 trillion in June, marking the third straight month of accelerated growth. Rising credit consumption typically accompanies economic growth, but that’s not what the current economic picture shows. The rise is most likely a follow-up to the pre-construction boom from 2020 to 2022, as those homes were completed and buyers required financing to complete the transactions. This isn’t a recovery—it’s the bill from the last boom arriving.
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